In this article, we will be taking a look at the 11 dividend aristocrats with over 3% yield. If you want to skip our detailed analysis of dividend investing, you can go directly to the 5 Best Dividend Aristocrats with over 3% Yield.
When it comes to dividend investing, one must almost always consider it a long-term strategy, since many companies only pay their shareholders on a once-per-quarter basis, with dividend yields being calculated annually. As such, if a dividend investor does not stay for a certain period of time, the full income potential of a stock may go unrealized. Additionally, when it comes to dividend investing, other metrics aside from attractive yields can be considerably useful in determining which stock would best fit their portfolio for investors, both current and aspiring. Some of the defining metrics investors use in their decisions include payout ratio and price-to-book ratio, as well as the frequency of dividend increase over set periods of time.
What are Dividend Aristocrats?
A Dividend Aristocrat refers to a publicly traded company that has consistently paid dividends every year to its investors, as well as increased its dividend yields for the past 25 years or more. According to a research conducted by S&P Global, Dividend growth stocks, particularly High Yield Dividend Aristocrats, have outperformed the market consistently since the time period of 1999-2021, providing protection against market volatility. Some of the most solid stock picks that have been known to increase their dividends for a sizeable period of time include The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and Chevron Corporation (NYSE:CVX).
Photo by Sharon McCutcheon on Unsplash
Our Methodology
For our list, we have selected dividend aristocrat stocks with yields of over 3%. Using the data tracked by Insider Monkey of about 873 hedge funds, we picked dividend stocks that are highly popular among these hedge funds today. For each stock we have mentioned its yield, along with the number of hedge funds holding a stake in it, ranking them based on their dividend yields. Lastly, we have made use of analyst ratings to determine which stocks are most favorable, largely based on positive ratings.
Why should we pay attention to hedge fund sentiment when choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
11 Best Dividend Aristocrats with over 3% Yield
11. The Coca-Cola Company (NYSE:KO)
Number of Hedge Fund Holders: 62
Dividend Yield: 3.17%
The Coca-Cola Company (NYSE:KO) is a multinational Georgia-based beverage corporation that engages in the manufacturing, retailing and marketing of syrups and beverages. The company ranks eleventh on our list of the 11 best dividend aristocrats with over 3% yield.
In the second quarter of 2021, The Coca-Cola Company (NYSE:KO) reported an EPS of $0.68, beating estimates by $0.12. The company’s revenue for the quarter came in at $10.13 billion, an increase of 42% on a year-over-year basis, and beat revenue estimates by $823.1 million. The stock has gained 11.22% in the past twelve months.
On July 22, Truist analyst Bill Chappell maintained a Buy rating on The Coca-Cola Company (NYSE:KO) and increased his price target for the stock to $65 from $60.
By the end of the second quarter of 2021, 62 hedge funds out of the 873 tracked by Insider Monkey held stakes in The Coca-Cola Company (NYSE:KO) worth roughly $24.96 billion. This is compared to 61 hedge funds in the previous quarter with a total stake value of approximately $24.90 billion.
10. Merck & Company, Inc. (NYSE:MRK)
Number of Hedge Fund Holders: 79
Dividend Yield: 3.19%
Merck & Company, Inc. (NYSE:MRK) is a multinational pharmaceutical company that provides a wide array of health solutions and products. Ranked tenth on our list of the 11 best dividend aristocrats with over 3% yield, the New-Jersey based company has a market capitalization of $206.56 billion.
In the second quarter of 2021, Merck & Company, Inc. (NYSE:MRK) reported earnings per share at $1.31, missing the forecast estimates by $0.04. The company’s revenue was $11.40 billion, beating market estimates by $208.55 million.
On October 1, Citi analyst Andrew Baum reiterated a Buy rating on the shares of Merck & Company, Inc. (NYSE:MRK), alongside $105 price target.
By the end of the second quarter of 2021, 79 hedge funds out of the 873 tracked by Insider Monkey held stakes in Merck & Company, Inc. (NYSE:MRK) worth more than $5.29 billion. This is compared to 79 hedge funds in the previous quarter with a total stake value of approximately $6.5 billion.
Much like The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and Chevron Corporation (NYSE:CVX), Merck & Company, Inc. (NYSE: MRK) is a notable stock to invest in.
9. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 58
Dividend Yield: 3.22%
Lockheed Martin Corporation (NYSE:LMT) is an American aerospace, security and technology corporation. Based in Maryland, the company researches, designs and manufactures technology systems and products worldwide. The aerospace company ranks ninth on our list of the 11 best dividend aristocrats with over 3% yield.
On September 27, Morgan Stanley analyst Kristine Liwag reiterated an Overweight rating and $458 price target on the shares of Lockheed Martin Corporation (NYSE:LMT).
By the end of the second quarter of 2021, 58 hedge funds out of the 873 tracked by Insider Monkey held stakes in Lockheed Martin Corporation (NYSE: LMT) worth roughly $1.6 billion. This is compared to 50 hedge funds in the previous quarter with a total stake value of approximately $2.3 billion.
On July 26, Lockheed Martin Corporation (NYSE: LMT) issued its quarterly earnings report, with an EPS of $6.52, in-line with the estimates for the quarter. The company’s revenue was reported at $17.03 billion, beating market estimates by $89.10 million.
In its Q4 2020 investor letter, RiverPark Advisers, LLC. shared their expectations of greater shareholder returns from Lockheed Martin Corporation (NYSE:LMT). Here is what the fund had to say:
“Despite better-than-expected third quarter results, LMT shares were weak for the quarter as defense spending is expected to be flat for the coming year. With a record $150 billion backlog and almost 30% of its revenue coming from building F-35 aircraft with deliveries forecast to reach 180 per year in 4-5 years (3Q’s revenue upside was from the F-35), we believe LMT should grow at a higher rate than overall defense budget growth and Street expectations over the next several years. Further, strategic acquisitions (LMT acquired AJRD for $4 billion in late December), debt pay down, a 3% dividend yield, and continued share buybacks from $6 billion per year of free cash flow should lead to even greater shareholder returns.”
8. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 73
Dividend Yield: 3.31%
Bristol-Myers Squibb Company (NYSE:BMY) is a biopharmaceutical company that researches and manufactures prescription biopharmaceuticals for global distribution. The company ranks eighth on our list of the 11 best dividend aristocrats with over 3% yield.
The company released its quarterly earnings report on July 28, with reported earnings per share of $1.93, beating estimates by $0.03. The reported revenue for the quarter was $11.70 billion, surpassing the predicted revenues by $474.30 million.
By the end of the second quarter of 2021, 73 hedge funds out of the 873 tracked by Insider Monkey held stakes in Bristol-Myers Squibb Company (NYSE: BMY) worth roughly $5.2 billion. This is compared to 81 hedge funds in the previous quarter with a total stake value of approximately $5 billion.
On July 26, Truist analyst Robyn Karnauskas began coverage of Bristol-Myers Squibb Company (NYSE:BMY) with a Buy rating and $74 price target.
7. General Mills, Inc. (NYSE:GIS)
Number of Hedge Fund Holders: 37
Dividend Yield: 3.33%
General Mills, Inc. (NYSE:GIS) is a multinational manufacturer and marketer of packaged consumer goods. Based in Minnesota, the company has a market capitalization of $37.14 billion and ranks seventh on our list of the 11 best dividend aristocrats with over 3% yield.
General Mills, Inc. (NYSE:GIS) last issued its quarterly earnings report on September 22, with a reported EPS at $0.99, beating market estimates by $0.10. The revenue declared for the quarter amounted to $4.54 billion, surpassing estimates by $238.36 million.
On October 10, Citi analyst Wendy Nicholson upgraded General Mills, Inc. (NYSE:GIS) to Buy from Neutral rating, with a price target of $70 on its shares, up from $63.
By the end of the second quarter of 2021, 37 hedge funds out of the 873 tracked by Insider Monkey held stakes in General Mills, Inc. (NYSE:GIS) worth roughly $744.9 million. This is compared to 31 hedge funds in the previous quarter with a total stake value of approximately $797 million.
Much like The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and Chevron Corporation (NYSE:CVX), General Mills, Inc. (NYSE:GIS) is a decent stock to invest in.
6. 3M Company (NYSE:MMM)
Number of Hedge Fund Holders: 42
Dividend Yield: 3.36%
3M Company (NYSE:MMM) is a multinational conglomerate based in Minnesota. The company operates through its four business sectors: Industry, Healthcare, Electrics and Consumer goods. The company has a market capitalization of $101.64 billion, and ranks sixth on our list of the 11 best dividend aristocrats with over 3% yield.
In its second quarter earnings report of 2021, 3M Company (NYSE:MMM) declared an EPS of $2.59, beating estimates by $0.30. The company’s revenue was $8.95 billion, an increase of 24.72% on a year-over-year basis, surpassing market estimates by $371.42 million.
On July 28, Argus analyst John Eade raised his price target on 3M Company (NYSE:MMM) to $225 from $220, and kept a Buy rating on the shares of the company.
By the end of the second quarter of 2021, 42 hedge funds out of the 873 tracked by Insider Monkey held stakes in 3M Company (NYSE:MMM) worth roughly $1.58 billion. This is compared to 41 hedge funds in the preceding quarter with a total stake value of about $1.51 billion.
Much like The Procter & Gamble Company (NYSE:PG), The Coca-Cola Company (NYSE:KO), Johnson & Johnson (NYSE:JNJ), and Chevron Corporation (NYSE:CVX), 3M Company (NYSE:MMM) is a good stock to invest in.
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Disclosure: None. 11 Best Dividend Aristocrats with Over 3% Yield is originally published on Insider Monkey.
